News Release

Third Quarter 2019 Comparable Sales increased 5.5% 
Third Quarter 2019 Diluted Earnings Per Share Increased 37.1% to $0.75 
Company Raises Full Year Outlook

LYNNWOOD, Wash., Dec. 05, 2019 (GLOBE NEWSWIRE) -- Zumiez Inc. (NASDAQ: ZUMZ) today reported results for the third quarter ended November 2, 2019.

Total net sales for the third quarter ended November 2, 2019 (13 weeks) increased 6.1% to $264.0 million from $248.8 million in the quarter ended November 3, 2018 (13 weeks). Comparable sales for the thirteen weeks ended November 2, 2019 increased 5.5% compared to a comparable sales increase of 4.8% for the thirteen weeks ended November 3, 2018.  Net income for the third quarter of fiscal 2019 was $19.2 million, or $0.75 per diluted share, compared to net income of $13.8 million, or $0.55 per diluted share in the third quarter of the prior fiscal year.

Total net sales for the nine months (39 weeks) ended November 2, 2019 increased 4.6% to $705.4 million from $674.1 million reported for the nine months (39 weeks) ended November 3, 2018. Comparable sales increased 4.2% for the thirty-nine weeks ended November 2, 2019 compared to a comparable sales increase of 6.3% for the thirty-nine weeks ended November 3, 2018. Net income for the first nine months of fiscal 2019 was $29.0 million, or $1.14 per diluted share, compared to net income for the first nine months of the prior fiscal year of $15.6 million, or $0.62 per diluted share.

At November 2, 2019, the Company had cash and current marketable securities of $178.6 million compared to cash and current marketable securities of $127.9 million at November 3, 2018. The increase in cash and current marketable securities was driven by cash generated through operations partially offset by capital expenditures.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “We are very pleased with the third quarter performance and our teams continued ability to provide high-quality service to the customer. The third quarter represented our fourth consecutive strong back-to-school season, our 13^th quarter of positive comparable sales gains and continued solid full price selling in each of our geographies that we operate.  At the same time, the initiatives we’ve implemented aimed at creating efficiencies and generating savings throughout our organization contributed to our better than expected bottom line and allowed us to convert mid-single digit comparable sales into a 37.1% improvement in earnings per share. The holiday season is off to a good start and we are confident that our distinct approach to retailing combined with an operating model built around a singular cost structure has Zumiez well positioned to deliver record results in 2019 and generate increased shareholder value for years to come.”

Fiscal 2019 Fourth Quarter-to-date Sales
With the Thanksgiving holiday shifting a week later in 2019, the fiscal month of November has significant comparability issues with the prior year.  Therefore, the Company is providing a comparable sales update for the period beginning November 3, 2019 through December 3, 2019 (quarter-to-date) compared with the same period in the prior year.  Both years then include the full Black Friday weekend as well as Cyber Monday shipments.  The Company's comparable sales increased 3.3% for the 2019 fourth quarter-to-date period through December 3, 2019 compared with the same period in the prior year ending December 4, 2018.

Fiscal 2019 Fourth Quarter and Full Year Outlook
The Company is introducing guidance for the three months ending February 1, 2020. Net sales are projected to be in the range of $314 to $320 million including anticipated comparable sales growth of between 2.0% and 4.0%. Consolidated operating margins are expected to between 12.5% and 13.0% resulting in net income per diluted share of approximately $1.26 to $1.32.  

Based upon better than anticipated trends and performance year-to-date, the Company is raising its annual guidance.  Fiscal 2019 comparable sales are now expected to increase approximately 4.0% and 4.5% compared to prior guidance of 2.0% to 4.0%.  Diluted earnings per share are now projected to range from $2.38 to $2.46, up from previous guidance of $2.10 to $2.20. 

Share Repurchase Authorization:
On December 4, 2019, Zumiez Inc. approved the repurchase of up to an aggregate of $100 million of its Common Stock (the “Repurchase Program”). The repurchases will be made from time to time on the open market at prevailing market prices. The Repurchase Program is expected to continue through the fiscal year 2020 that will end on January 30, 2021, unless the time period is extended or shortened by the Board of Directors. The Repurchase Program supersedes all previously approved and authorized stock repurchase programs.

Conference call Information
A conference call will be held today to discuss third quarter fiscal 2019 results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (574) 990-9934 followed by the conference identification code of 5856563.

About Zumiez Inc.

Zumiez is a leading specialty retailer of apparel, footwear, accessories and hardgoods for young men and women who want to express their individuality through the fashion, music, art and culture of action sports, streetwear, and other unique lifestyles. As of November 30, 2019 we operated 719 stores, including 608 in the United States, 52 in Canada, 48 in Europe and 11 in Australia. We operate under the names Zumiez, Blue Tomato and Fast Times. Additionally, we operate ecommerce web sites at zumiez.com, blue-tomato.com and fasttimes.com.au

Safe Harbor Statement

Certain statements in this press release and oral statements relating thereto made from time to time by representatives of the Company may constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These statements include, without limitation, predictions and guidance relating to the Company's future financial performance, brand and product category diversity, ability to adjust product mix, integration of acquired businesses, growing customer demand for our products and new store openings. In some cases, you can identify forward-looking statements by terminology such as, "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. These forward-looking statements are based on management's current expectations but they involve a number of risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in the forward-looking statements as a result of risks and uncertainties, which include, without limitation, those described in the Company’s annual report on Form 10-K for the fiscal year ended February 2, 2019 as filed with the Securities and Exchange Commission and available at www.sec.gov. You are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements speak only as of the date on which they are made and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

ZUMIEZ INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)

	Three Months Ended
	November 2, 2019			% of Sales			November 3, 2018				% of Sales
Net sales	$	264,022		100.0	%		$	248,795			100.0	%
Cost of goods sold		169,446		64.2	%			161,922			65.1	%
Gross profit		94,576		35.8	%			86,873			34.9	%
Selling, general and administrative expenses		70,266		26.6	%			68,479			27.5	%
Operating profit		24,310		9.2	%			18,394			7.4	%
Interest income, net		1,002		0.4	%			493			0.2	%
Other income (expense), net		275		0.1	%			(74	)		0.0	%
Earnings before income taxes		25,587		9.7	%			18,813			7.6	%
Provision for income taxes		6,408		2.4	%			4,990			2.0	%
Net income	$	19,179		7.3	%		$	13,823			5.6	%
Basic earnings per share	$	0.76					$	0.55
Diluted earnings per share	$	0.75					$	0.55
Weighted average shares used in computation of earnings per share:
Basic		25,231						24,974
Diluted		25,560						25,261

ZUMIEZ INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)

	Nine Months Ended
	November 2, 2019			% of Sales			November 3, 2018				% of Sales
Net sales	$	705,376		100.0	%		$	674,052			100.0	%
Cost of goods sold		467,140		66.2	%			452,057			67.1	%
Gross profit		238,236		33.8	%			221,995			32.9	%
Selling, general and administrative expenses		201,285		28.6	%			198,613			29.4	%
Operating profit		36,951		5.2	%			23,382			3.5	%
Interest income, net		2,652		0.5	%			1,015			0.1	%
Other income (expense), net		987		0.1	%			(308	)		0.0	%
Earnings before income taxes		40,590		5.8	%			24,089			3.6	%
Provision for income taxes		11,593		1.7	%			8,496			1.3	%
Net income	$	28,997		4.1	%		$	15,593			2.3	%
Basic earnings per share	$	1.15					$	0.63
Diluted earnings per share	$	1.14					$	0.62
Weighted average shares used in computation of earnings per share:
Basic		25,173						24,920
Diluted		25,480						25,220

ZUMIEZ INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

	November 2, 2019					February 2, 2019				November 3, 2018
	(Unaudited)									(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	31,929				$	52,422			$	29,640
Marketable securities		146,718				112,912				98,236
Receivables		16,790				17,776				17,521
Inventories		183,381				129,268				186,938
Prepaid expenses and other current assets		10,757				14,797				15,853
Total current assets		389,575				327,175				348,188
Fixed assets, net		115,170				120,503				123,074
Operating lease right-of-use assets		301,736					—				—
Goodwill		57,580				58,813				58,619
Intangible assets, net		14,772				15,260				15,203
Deferred tax assets, net		7,424				5,259				4,438
Other long-term assets		8,773				7,180				7,197
Total long-term assets		505,455				207,015				208,531
Total assets	$	895,030				$	534,190			$	556,719
Liabilities and Shareholders’ Equity
Current liabilities
Trade accounts payable	$	73,418				$	35,293			$	90,060
Accrued payroll and payroll taxes		21,929				21,015				21,724
Income taxes payable		3,430					5,817				2,782
Deferred rent and tenant allowances		—				7,489				7,790
Operating lease liabilities		59,742					—				—
Other liabilities		18,815				23,494				24,645
Total current liabilities		177,334				93,108				147,001
Long-term deferred rent and tenant allowances		—				37,076				37,631
Long-term operating lease liabilities		287,400					—				—
Other long-term liabilities		3,457				3,550				3,315
Total long-term liabilities		290,857				40,626				40,946
Total liabilities		468,191				133,734				187,947
Shareholders’ equity
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding		—					—				—
Common stock, no par value, 50,000 shares authorized; 25,805 shares issued and outstanding at November 2, 2019, 25,521 shares issued and outstanding at February 2, 2019 and 25,532 shares issued and outstanding at November 3, 2018		159,251				153,066				151,658
Accumulated other comprehensive loss		(11,747		)		(9,224		)		(9,888		)
Retained earnings		279,335				256,614				227,002
Total shareholders’ equity		426,839				400,456				368,772
Total liabilities and shareholders’ equity	$	895,030				$	534,190			$	556,719

ZUMIEZ INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

	Nine Months Ended
	November 2, 2019				November 3, 2018
Cash flows from operating activities:
Net income	$	28,997			$	15,593
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion		18,776				21,249
Noncash lease expense		42,960				—
Deferred taxes		29				(919	)
Stock-based compensation expense		4,819				4,431
Other		(439	)			482
Changes in operating assets and liabilities:
Receivables		3,190				(1,680	)
Inventories		(54,687	)			(63,892	)
Prepaid expenses and other assets		(934	)			(1,904	)
Trade accounts payable		38,186				53,037
Accrued payroll and payroll taxes		971				1,342
Income taxes payable		(2,586	)			(2,206	)
Deferred rent and tenant allowances		—				(1,564	)
Operating lease liabilities		(45,512	)			—
Other liabilities		(4,316	)			(6,820	)
Net cash provided by operating activities		29,454				17,149
Cash flows from investing activities:
Additions to fixed assets		(13,871	)			(15,683	)
Purchases of marketable securities and other investments		(165,912	)			(116,430	)
Sales and maturities of marketable securities and other investments		132,974				115,536
Net cash used in investing activities		(46,809	)			(16,577	)
Cash flows from financing activities:
Proceeds from revolving credit facilities		—				32,776
Payments on revolving credit facilities		—				(27,651	)
Proceeds from issuance and exercise of stock-based awards		1,604				899
Payments for tax withholdings on equity awards		(238	)			(195	)
Net cash provided by financing activities		1,366				5,829
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(242	)			(777	)
Net (decrease) increase in cash, cash equivalents, and restricted cash		(16,231	)			5,624
Cash, cash equivalents, and restricted cash, beginning of period		54,271				25,803
Cash, cash equivalents, and restricted cash, end of period	$	38,040			$	31,427
Supplemental disclosure on cash flow information:
Cash paid during the period for income taxes	$	14,024			$	11,893
Accrual for purchases of fixed assets		1,412				1,477

Company Contact:
Darin White
Director of Finance &
Investor Relations
Zumiez Inc.
(425) 551-1500, ext. 1337

Investor Contact:
ICR
Brendon Frey
(203) 682-8200 

Source: Zumiez Inc